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Newest D-Street entrant may let you play travel theme directly — here's how it makes money

Newest D-Street entrant may let you play travel theme directly — here's how it makes money

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By CNBCTV18.com Sept 7, 2022 3:58:33 PM IST (Updated)

DreamFolks share price: The airport service aggregator aims to maintain an EBITDA margin of 12 percent, says CMD Liberatha Peter Kallat. She also sheds light on how the company operates its business.

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Newly-listed DreamFolks Services — an airport service aggregator — is now the best Dalal Street debutant in 2022 so far. The DreamFolks stock finished its first day on BSE and NSE at a premium of 42 percent over the upper end of its IPO price range.
Many experts feel the latest Dalal Street entrant may let investors play the travel theme directly, rather than through hotels or airlines.
Here's how the company operates:
What does it do?
DreamFolks Services owns a platform that enables its clients — from card network providers to banks to airline operators to hotels — to provide a slew of services to the end-consumer.
With a strong focus on technology, New Delhi-based DreamFolks facilitates access to a multitude of airport-related services to the end-user, such as lounge access, meet and assist, spa, food and beverage, airport transfer, transit hotels and baggage transfer.
How it works
In an interaction with CNBC-TV18, DreamFolks CMD Liberatha Peter Kallat explained how the company operates its business.
Whenever a customer taps the card at a lounge, the transaction is complimentary or the benefit is complimentary, and the customer does not pay anything, which means the lounge usage is free, she said. "But for every transaction happening at the lounge, DreamFolks invoices to the bank or the card network and the card or the network would pay DreamFolks for the transactions happening at the lounges," she said.
Similarly, the lounges send invoices to DreamFolks for all the transactions that actually take place there. "The way it works is that we have a contract of period, of four years going up to five years with the clients, and even with the lounge partners... There is a fixed price that is done with card networks or the banks. Similarly, there is a fixed price pre-decided with the lounge operators as well," Kallat added.
The company has already started to expand its operations to railways lounges.
There are nine railway lounges across the country where the company has begun a few bank and network programs, she said. 'Railways could also be one of the focus (areas) for us now because there are more and more lounges coming up in Indian Railways." 
Here are some other things about the business that she highlighted:
  • Company has 100 percent coverage across the 54 airport lounges operational across India
  • Lounges have different pricing
  • On average, if the banks or card networks pay around Rs 100, DreamFolks keeps around 15 percent and pays rest to lounges
  • Company expanding operations in railway lounges
  • Railway lounge pricing much lower than compared to what airports
  • As of March 31, 2022, the company had exclusivity to provide access to 12 domestic lounges across 11 airports in the country, according to its website.
    Through its partnerships with other service providers, it had a global footprint extending to 1,416 touch points in 121 countries, including 244 touch points in India.
    Profitability
    DreamFolks reported a net profit of Rs 13.4 crore for the April-June period, as against a net loss of Rs 1.4 crore for the corresponding period a year ago. Its revenue increased 6.5 times to Rs 160.3 crore compared with the year-ago period, according to a regulatory filing.
    Its consolidated EBITDA margin came in at 12 percent, a level the company aims to maintain going forward.
    DreamFolks could be a a concept stock for investors looking to play the travel theme, Elixir Equities Director Dipan Mehta told CNBC-TV18.
    "If you look at the choices around you, apart from hotels and aviation, there is no real stock with which one can play the investment theme as far as rising travel is concerned... Maybe this particular stock could help you get in to that particular investment theme," said Mehta, who believes DreamFolks will be a good stock to track going forward.
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